Jan 7 Reuters The pound rose to a new oneweek high versus the dollar on Tuesday after jumping the day before after a media report said U.S. Presidentelect Donald Trump39;s advisers were considering applying tariffs only to critical imports.

Trump, who refuted the report on Monday, had vowed to impose tariffs of 10 on global imports into the United States along with a 60 tariff on Chinese goods, increasing expectations for higher inflation and supporting the dollar.

Sterling rose 0.25 to 1.2548, after reaching1.2562, its highest level since Dec. 31.

It hit 1.2349 last week, its lowest level since April 2024, as the dollar rallied on expectations for strong U.S. growth and increased tariffs.

Analysts also said the combination of the downward revision to British thirdquarter gross domestic product data and the news that three members of the Monetary Policy Committee of the Bank of England had voted for an immediate rate cut in December had triggered a new debate at the end of 2024 about how growth and inflation risks would feed into the BoE39;s policy decisions.

Traders on Tuesday were pricing in around 56 basis points bps of interest rate cuts from the Bank of England this year, down slightly from late last week IRPR. The BoE lowered rates by 50 bps to 4.75 in 2024.

At a time when inflation risks are moderating through most of Europe, UK services inflation has remained particularly sticky, said Jane Foley, senior forex strategist at Rabobank.

Layered on top of that…